18^th August, 2022, 

To All Members, 

Subject: - Withdrawal of levy of Tax Collection at Source (TCS) on sale of overseas tour packages to foreign tourists and FTOs. 

Dear Friends, 

You will be pleased to know that with IATO’s vigorous follow up and untiring efforts and with the support from the Ministry of Tourism, Govt. of India, Tax Collection at Source (TCS) has been completely withdrawn on sale of overseas tour packages to foreign tourists/individuals as well as FTOs with immediate effect. 

As informed to you earlier through our Circular dated 04.04.2022 that on 30.03.2022 the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance issued Notification whereby the Government exempted TCS provisions on sale of overseas tour packages to an individual not resident in India and who is visiting India. However, the relief given by the Government was not sufficient in as much as it did not exempt FTOs / Corporate entity who buy overseas tour package for travel of their clients / foreign tourists in neighbouring countries like Nepal, Bhutan, Maldives etc. Secondly, the notification was silent in case the foreign tourists / individuals book the tour through Indian agents and visit the neighbouring country directly without touching India. In such a case, TCS was not exempted. Therefore, the IATO took up the matter with the Ministry of Finance, CBDT and followed up the case with the concerned officials continuously since April, 2022. 

After vigorous follow up, we are pleased to inform you that the Government has finally accepted our representation and has now issued notification no. S.O. 3878 (E) dt. 17.08.2022 (copy attached) exempting TCS provisions to a person (being a buyer) who is a non-resident in terms of section 6 of Income Tax Act, 1961 and who does not have a permanent establishment in India. The impact of this notification is that both foreign individuals and FTOs (buyers) buying overseas tour packages from the Indian Tour Operators will be exempt from TCS provisions. It is not necessary that the foreign tourist should visit India for onward journey to the neighbouring country. Secondly, the FTO / Corporate entity established in foreign country and not maintaining any permanent establishment / branch in India would also be exempted from TCS provisions. A copy of the notification is enclosed for your ready reference. 

This is a much awaited relief coming from the Government for the tourism industry. This was made possible only with our continuous follow up the matter with the concerned officers in the Ministry of Tourism as well as the Ministry of Finance. The members are advised to stop charging TCS on sale of overseas tour packages to foreign tourists / individuals as well as FTOs. The new Notification is operative from immediate effect from 17.08.2022. 

I would like to sincerely thank Shri Arvind Singh, IAS, Secretary (Tourism), Mrs. Rupinder Brar, IRS - former Additional Director General (Tourism), Ministry of Tourism, Govt. of India for their support and personal intervention in the matter and also thanks to  Mr. K.C. Varshney, IRS- Joint Secretary, Department of Revenue, Ministry of Finance, Government of India, who understood our concern and took keen interest in removing the anomalies.   

Lastly I would like to mention that whatever IATO achieves is due to good wishes, blessing and the patience of our members, which encourage us to continue our efforts. 

With regards,